Constant Opportunity Cost

Definition

Constant opportunity cost refers to the concept that as more units of a particular good are produced, the opportunity cost remains constant. This means that resources are equally suited for producing both goods.

Related terms

Law of Diminishing Returns: This law states that as additional units of a variable input are added while other inputs remain fixed, eventually there will be a decrease in marginal output.

Trade-off: A trade-off occurs when choosing one option over another involves sacrificing some benefits or advantages.

Comparative Advantage: Comparative advantage refers to the ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than others.